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TMI Blog1966 (9) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) The facts which are required to be stated to dispose of the two petitions are as follows: In both the petitions the common petitioner is Prathvi Cotton Mills Ltd., a company registered under the Indian Companies Act VII of 1913 (hereinafter called petitioner simpliciter). In Special Civil Application No. 846 of 1963, it is the sole petitioner. The second petitioner in Special Civil Application No. 765 of 1964 is one Laxminivas B. Rungta, a director and share holder of the above mills. In both the petitions, respondents are the Broach Borough Municipality, a body constituted under and governed by the provisions of the Bombay Municipal Boroughs Act, 1925 (hereafter called the Boroughs Act), and one V. M. Bhatt, its Chief Officer, who are respectively respondents Nos. 1 and 2. In the second petition, the State of Gujarat is the third respondent. The first respondent will be called Municipality simpliciter in the rest of this judgment. The municipality was governed by the Borough Act till 31st December 1964. The Boroughs Act was repealed by the Gujarat Municipalities Act, 1963 (hereafter called the Municipalities Act) which came into force on 1st January 1965. As and from that da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner. The total amount claimed in the two sets of bills was ₹ 23.159 including the arrears of ₹ 8,105 in respect of the previous year 1962-63. Petitioner resisted this claim also on the same ground as it did in respect of the previous demand and met with the same answer and threat. Therefore, petitioner filed the second petition bearing No. 765 of 1964. However, before the second petition was filed, the State Legislature had passed the Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963 (hereinafter called the Validation Act) which came into force on 26th January 1964. By this latter Act, the Legislature purported to validate the imposition, collection and recovery of taxes or rates assessee, inter alia, under the Boroughs Act and sough to confer authority on municipalities to collect and recover such taxes. After the two petitions were filed, the same Legislature also passed the Municipalities Act, which came into force on 1st January 1965. Section 99 of the latter Act was suitably amended to enable the Municipality to impose a tax on the capital value of lands and buildings, thereby enabling municipalities to get over the decision of the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution and the rules were also required to specify certain other matters which it is not necessary to enumerate. Then, the municipality was required to publish the rules with a notice inviting objections, consider those objections and to submit the rules and the objections for the consideration and sanction of the State Government. Section 76 conferred power upon the State Government to sanction the rules aforesaid subject to such modifications as it might feel proper. Section 77 required the Municipality to publish the sanctioned rules together with a notice and to specify in that notice a date, not being less than one month from the date of the publication of such notice, from which the selected tax would come to be imposed. The District Municipalities Act of 1901 contained the same provisions relating to the imposition of taxes. These provisions came up for consideration before their Lordships of the Supreme Court in the case of Municipality of Anand v. State of Bombay AIR 1962 SC 988, as to when a tax is imposed under the above provision. Their Lordships held that a tax comes to be imposed only on the date specified in the notice mentioned in the section corresponding to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions relating to assessment of lands and buildings were restricted under the boroughs Act to rates, they are extended under the Municipalities Act, to all taxes on buildings and/or lands. Section 279 of the Municipalities Act repeals the Boroughs Act, and sub-section 92) enacts the saving clause. The relevant part of clause (vi) of sub-section (2) of section 279 is as follows: 279. (1) (2) Notwithstanding the repeal of the said Acts - (vi) any .tax .. rules made imposed in respect of the said boroughs . . . . . . . and in force immediately before the date of the commencement of this Act shall in so far as they are not inconsistent with the provisions of this Act be deemed to have been made . imposed '............... under this Act in respect of the borough and shall continue in force until it is superseded or modified by only tax . rule .............. made ............... imposed ................ under this Act: Sub-section (vii) of section 2 of the Validation Act defines the relevant municipal law as meaning, in relation to a municipal borough in the former Bombay area of the State of Gujarat, the Borou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in the Boroughs Act. Rule 10 states that, in the case of a dispute about the succession to any person whose name is entered as owner of any property in the assessment list, the name of the person in actual occupation shall be entered as the owner in the assessment list and that, the house tax shall be recovered from him until the dispute is settled or an order of a competent Court is produced. The Chief Officer has been given the power to decide the question as to whose name should be entered in the assessment list, and the person whose name is so entered is rendered responsible for the payment of the house tax. Rule 12 casts an obligation on the purchaser of a property to pay all the arrears of the house tax due on the building or land purchased previous to the date of the purchase. The thirteenth and the last rule says that, the house tax shall be levied on the capital value of buildings and/or lands. (6) In Gordhandaas' case [1964]2SCR608 the Ahmedabad Municipality levied in impost on open land by framing rule 350a, the relevant part of which is reproduced in the minority judgment of Sarkar J. At page 1752. The rule imposed a rate upon open land and levied it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial assessment and levy were void, and allowed the appeal. In that view of the matter, the majority of the learned Judges did not deal with the question of legislative competence and kept the question open. Sarkar J., however, after observing that the contention that a rate did not include a levy on capital value was not raised in the High Court, disagreed with the majority view and held that , a rate could be imposed on the basis of capital value. On that view of the matter, the learned Judge proceeded to deal with the question of legislative competence and, in agreement with the judgment of the Bombay High Court under appeal, the learned Judge held that the rate in question fell within the purview of Entry 42 in List II of Schedule VII of the Government of India, Act 1935, and was within the competence of the Provincial Legislature. (7) The main contention of petitioner in the present petitions is based upon the judgment delivered by their Lordships of the Supreme Court in Gordhandas' case [1964]2SCR608 . Petitioner contends that the impugned house tax is a rate within the meaning of section 73, sub-section (1), clause (i) of the Boroughs Act and, being based on capital v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . alternatively, petitioner contends that, in any case, whereas the levy upto 26th January 1964 can be validated under the Validation Act the levy for the subsequent period from 27th January 1964 upto 31st December 1964 does not come within the purview of the Validation Act and the levy for the period beginning from 27th January 1964 to 31st March 1964 does not come within the purview of the Municipalities Act. In addition to this, petitioner contends that, the House Tax Rules and the house tax imposed thereunder are confiscatory in nature and, therefore, violative of his fundamental right enshrined in Article 19, clause (1), sub-clause (f). (8) Therefore, the submissions which Mr. Nanavati raises for the decision of this Court are as follows: (1) the Municipality had no power to levy, impose or collect the house tax on lands and buildings on the basis of capital value or by a method other than a percentage of rental value and the House Tax Rules framed by the Municipality and the consequential assessment, levy and collection of the house tax are illegal and ultra vires the power of the Municipality; (2) that the Validation Act is ultra vires the power of the State Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 of 1963. He draws our attention to the averments in the petition that the house tax was an impost under section 73 (1) (i) of the Boroughs Act contained in paragraphs 5 and 6 of the petition and the affidavit in reply filed by the Chief Officer of the Municipality for himself and on behalf of the Municipality, in which it is distinctly admitted that the contents of the aforesaid two paragraphs are substantially true. Mr. Shah on behalf of the Municipality and the Chief Officer concedes that this is so. But, he contends that, the admission has been made under a misapprehension of law and an incorrect of the resolution and the rules imposing the house tax. In any case, the learned Advocate General contends that, the admission made by the Municipality and its Chief Officer is not binding on the State. He contends that, such an admission not having been made by the State, the State is entitled to call for a decision on merits as to whether the house tax is a rate or not. The pleadings in the second petition are not exactly alike those in the first petition. In the latter petition, the averment that the house tax is an impost under section 73, sub-section (1), clause (i) has been tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st what tax they have imposed. He contends that, in any case, petitioner is entitled to assume, having regard to the aforesaid State of the pleadings, that respondents had admitted its contention that the house tax was a rate under S. 73 sub-section (1), clause (i), We have given our careful consideration to the rival contentions. On the whole, we have come to the conclusion that, though undoubtedly, there is a clear admission made by the Municipality and its Chief Officer in the first petition, we cannot say that there is any such admission in the second petition or in the pleadings of the State in the first petition. The learned Advocate General draws our attention to the fact that the provisions embodied in sections 78 to 89 in the Boroughs Act deal with not only a rate under section 73 (1) (i), but also with a tax in the form of a rate on buildings and lands. He contends that, the house tax rules do not in terms provide for a specific procedure for the assessment of the house tax, and what the State intends to convey by reference to clause (i) of S. 73, sub-section (1), is that, the procedure which is laid down in section 78 onwards is to be followed in the case of the house ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied on the basis of the capital value and not on the basis of the annual letting value of lands and buildings. The illegally will arise on account of the fact that the term rate as used in section 73, sub-section (1), clause (i), can mean only a tax on the annual letting value of lands and buildings and cannot take within its c a tax based on capital value. Now, the main point of distinction between Gordhandas' case [1964]2SCR608 the relevant rule used the expression rate the House Tax Rules in the present case do not use any such expression. They use the wider term tax which may include a rate or not. Therefore whether the impugned house tax is a rate or a tax in the sense of non-rate tax, must depend upon the interpretation of the House Tax Rules. Mr. Nanavati's supports his connection that the impugned house tax is a rate by the following facts: (1) the use of the word rate in rules 2 and 11 and Schedule E to the Rules: (2) Rule 5: (3) section 75 (1), clause (iii) of the Boroughs Act; (4) the absence of any provision for assessment of the house tax in the rules; and (5) the fact that actually, the Municipality followed the proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (iv) in section 75(a) which says that al other matters which the State Government may requires to be specified should be specified by the rules. If the basis for a tax is capital valuation, then it is quite clear clause (iii) will have to be provided for in the rules. But the difference between the two will be that, when dealing with clause (iii) the basis will be the annual letting value, in other basis will be have to be capital valuation. Mr. Nanavati is right that the rules do not directly provide for the preparation of the assessment list and the procedure to be followed for the assessment of the house tax. But, in our judgment, he is not wholly right. There are indications in the rules themselves that, the executive authorities of the Municipality are required to c an c list. This is quite clear from rule 10 which deals with mutation c in the case of disputed c. In our judgment, there is c force in the argument advanced on behalf of respondents that, probably, the executive authorities took their clue from rule 10 and adopted the procedure for the assessment of the house tax as laid down in sections 78 to 89. But, having regard to the fact that the rules specifically stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to impose the house tax. It is quite obvious that, this question has, in any case, to be decided in the present petitions. It is true that it may not also arise for decision if he case is directly within the ratio of Gordhandas' case [1964]2SCR608 and Validation Act and the Municipalities Act are held not to apply to the facts of the present case and the former will save the tax so that in any case, the legislative competence of the municipal authorities does required to be decided. It is not necessary undertake a decision on this subject separately in regard to all the three acts. The second and the third submissions of Mr. Nanavati do take within their purview of legislative competence of the boroughs Municipality in regard to the house tax. Having regard to our decision on the first submission, it is quite clear that, the legislative competence on this score also will arise for consideration. Therefore, we propose consider the question of the legislative competence of the municipal authorities which imposed the house tax, and the legislative competence of the State Legislature which enacted the Validation Act and Municipalities Act together. With the above modification, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned tax levied by the rule 350A fell within the legislative entry 42 of List II of the schedule to the Government of India Act, 1935. Therefore, there is no doubt whatsoever that, the ratio of that case is a binding precedent to this Court and the matter is no longer res integra. However, Mr. Nanavati contends that, that decision is now rendered effete and is no longer a binding precedent for a variety of reasons. Firstly, he contends that, even if it be assumed that the decision was a binding precedent at the time when it was given, it is no longer so now because the decision has been displaced by the decision of the Supreme Court in Gordhandas' case, reported in [1964]2SCR608 . He contends that, the decision having been reversed, no part thereof can be of any binding authority. We are unable to agree with this submission. Their Lordships of the Supreme Court have definitely stated in their decision that, having regard to their decision on the interpretation of the term rate they do not propose to decide the question about the legislative competence of the Provincial Legislative and do not propose to express any opinion thereon. In the face of this, it is difficult to uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r J. he says that, in the passage referred to on pages 1035 and 1036 of the report (Bom LR): (at 99 193-194 of AIR) the learned Judge is not considering the legislative history and practice on the topic of rate, but he is considering the topic of municipal taxation and, therefore, there is no conflict between the view expressed by Gajendragadkar J and that expressed by the Supreme Court. We are unable to agree without his refinement of the learned Advocate General. Whilst this is so, we are unable also to agree with the submission of Mr. Nanavati that the decision of the Bombay High Court is robbed of its binding nature because of the above flaw in its reasoning. In the first instance, Mr. Nanavati is not right in contending that the decision is mainly raised on the above legislative history and practice on the topic of rate. A perusal of the judgment of Gajendragadkar J shows that he reaches the conclusion about the legislative competence before he discuses the topic of the legislative history and topic and the conclusion is reached by him on the bases of eight reasons. It is after reaching the conclusion that the learned Judge proceeds to consider the legislative history and prac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to impose a tax on lands and buildings on the basis of capital value and, therefore, the question of making a reference to a larger Bench does not arise. (13) However, before we do this, we propose to indicate two more arguments which Mr. Nanavati advances in support of his proposition that the above decision is not binding. Firstly, Mr. Nanavati contends that, the above decision not is in conflict with the Full Bench decision reported in Byramjee Jeejeebhoy v. Province of Bombay. In that case, the Full Bench had to consider the vires of the urban immovable property tax. The contention which it was called upon to examined the whether that tax was within the competence of the Provincial Legislative . the rival contentions were as follows. The appellant in that case contended that the fax fell under the Federal Legislative Entries Nos. 54 and 55 -income-tax and a tax on the capital value of asset. All the three learned Judges constituting the Full Bench held that the tax fell within the purview of the Provincial Entry 42 and that the Federal Entries 54 and 55 were not attracted to the tax. Beaumount c. J., after holding that the tax feel in the Provincial Entry, reached the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been considered in that case we are not convinced that Bombay case of Gordhandas AIR1954Bom188 is in any way in conflict with the case of Byramjee Jeaejjebhoy. Secondly, Mr. Nanavati contends that, Gordhandas' case AIR1954Bom188 is in any event in conflict with the decision of the Bombay High Court recorded in [1952]21ITR458(Bom) , J.M. Duggan v. commissioner of Income Tax. Bombay city. In that case, the validity of the imposition of capital gains tax imposed by the central Legislative was challenged. In that case, the Income Tax authorities justified the tax on the basis of entries Nos. 54 and 55 in the Federal List. Chagia C. J. Came to the conclusion that the tax fell in entry NO. 55, and Tendholar J. Held that it fell in entry No. 54. Thus, the two learned Judges, whilst holding that the tax was within the competence of the Central Legislative, differed as to within which particular entry the tax fell Chagla C.J. also referred to entry 42 in the Provincial List. He observed that a tax on capital value of lands and buildings did not fall within the purview of that entry. It is on the latter observation that Mr. Nanavati relies. These observations have also been considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, agree with the view taken by the learned Judges. Under the circumstances in our judgment there is no merit in the contention of Mr. Nanavati that the Bombay case of Gordhandas AIR1954Bom188 is in conflict with Duggan's case: [1952]21ITR458(Bom) . (14) Before we conclude the above topic, we may mention that, Mr. Nanavati had urged that the minority decision recorded by Sarkar J. In Gordhandas' case: [1964]2SCR608 was not a binding authority. He based his contention upon articles 141 and 145 clauses (4) and (5) and rule No. 3 of Order XIII of the Supreme Court Rules. We are not called upon to decide this interesting question because, the learned counsel for respondents did not raise any such contention for our decision they conceded that the judgment of Sarkar J. was not a binding precedent. But they contend that being the judgment of a Judge of the highest Court in the country, it is of great persuasive value. Mr. Nanavati does not arise any objection to this line of reasoning. (15) That brings us to the merits of the rival contention regarding the legislative competence of the State Legislature. Mr. Nanavati contends that, the house tax being on capital value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreting the entries in the aforesaid manner, any conflict is found between the two sets of entries respectively falling in the two different Lists, then, an attempt must be dame to reconcile the two entries, so as to make one consistent with the other. In attempting to do so, sometimes, the amplitude of the legislative power of the Parliament , and sometimes that of the State Legislatures, may have to be curtailed. In considering the question as to whether there is any such conflict in a given case, the impugned piece of legislation must be considered on the principle of pith and substance If, after making an effort in the above direction, the Court finds that still a conflict persists in the legislative powers of the Parliament and the State Legislatures, then, Article 246 comes into operation and the power of the State Legislature must yield to the legislative power of the Parliament. We can not do better than quote a passage from the judgment of the Supreme Court reported in AIR1962SC1044 on this subject which, in our judgment, constitutes a load star in interpreting rival entries and testing the validity of any impugned legislation:- The power to legislate is given to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under entry 86 is on capital value of assets other than agricultural lands and not on assets. Contrasting the two entries, it is quite clear that, where as under entry 49, lands and buildings are units of taxation, under entry 86, the unit of taxation is the capital value of assets. Under entry 49 agricultural land can be the unit of taxation but, under entry 86, capital value of agricultural land cannot be such a unit. There is nothing in entry No. 49 which indicates that the tax is limited only to the ratable values, i.e., the annual letting values of lands and buildings As Broomfield J has pointed out in the case of Sir Byramjee Jeejeebhoy, AIR 1940 Bom 65 at p. 70, under that entry, tax can be levied on a variety of bases - the extent of lands, floor areas, number of storeys etc. Therefore, whereas tax under entry 86 must necessarily be restricted to capital value, that tax under entry 49 can be on a variety of bases including capital value. The word assets in entry 86 may include lands and buildings, but, the latter do not exhaust assets which an individual can hold. The term assets may not have the same meaning as lands and buildings in all cases. Whereas, the term ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, broadly speaking, the subject-matter dealt with by entry 86 is a tax on capital value of assets, whereas the subject-matter dealt with by entry 49 is a tax on lands and buildings. Having regard to the meaning of the crucial words assets and lands and buildings , and, having regard to the fact that, the Parliament's power of legislation in regard to assets is restricted only to their capital value whereas the States powers are not so restricted, we have no doubt whatsoever that, the identity of the two kinds of taxation can easily be distinguished in a given case. If the tax is on the available properties of an individual or a company then, the tax must be on capital value thereof, whereas, if the tax is on lands and buildings, it can be levied either on capital value or on rateable value or on any other basis Whereas, in the case of entry 86, capital value is itself the subject-matter, in the case of a tax on lands and buildings, capital value would be only one of the several measures which can be adopted for the purpose of levying the tax thereon. In that view of the matter, we are not in agreement with the contention of Mr. Nanavati that, a construction of the two ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been followed by the two High Courts of Kerala and Orissa in Mammad Keyi v. Wealth Tax Officer, Calicut, AIR1962Ker110 and Badri Narayanamurthy v. Commissioner of Wealth Tax, B and O [1965]56ITR298(Orissa) . (19) In view of our aforesaid conclusion, we find that, the imposition of the house tax under the Boroughs Act and the continuance of such house tax under the Municipalities Act, being within the legislative competence of the State Legislature, will be within the legislative competence of the Municipality too. It is not disputed by Mr. Nanavati that, the Legislature, which has the power to impose a tax, has also the power to legislate for the validation of such a tax. On that principle, we must also record the finding that the Validation Act is also within the legislative competence of the State Legislature. (20) That brings us to the fourth submission. However, before we discuss that submission, it will be convenient first to read and understand the Validation Act as a whole because, such an understanding will help us not only to dispose of the fourth submission, but the next group of four further submissions. (21) The preamble of the Validation Act says that, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not being based on annual letting value of the building or land, as the case may be. The third part begins with and the imposition, collection and recovery of the tax or rate so assessed . . . . . . and ends with shall be valid and shall be deemed always to have been valid . The fourth part begins thereafter and ends with or on the basis of a percentage of such capital value was not authorised bylaw . And the fifth and the final part consists of the balance of the section. The non obstante clause is intended to enact that the section operates in spite of anything to the contrary decided by any judgment, decree or order of a Court or tribunal or any other authority. Subject to an indifferent argument advanced by Mr. Nanavati, presently to be mentioned, it is not disputed that, this non obstante clause takes within its purview the judgment of the Supreme Court delivered in Gordhandas' case In other words, there is no dispute that, the Legislature intends that the validating section shall operate in spite of the decision of the Supreme Court that the levy of a rate on the basis of capital value is bad and illegal. The other parts of the section deal with a number of concep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati, therefore, any law which is declared by the Supreme Court is sacrosanct and cannot be changed even by a legislative fiat. It is this argument of Mr. Nanavati which we have described above as indifferent. In our judgment, there is no merit in this contention. It is undoubtedly true that, decision on a point of law recorded in the judgment of the Supreme Court, is the law of the land and it is binding on all Courts in India. But, it is important to notice that, the law so declared is the ordinary law of the land and it is not constituent law. Article 141 expressly makes it binding on all Courts. It does not make it binding on Legislatures. The law so declared, being the ordinary law of the land, can be changed by the Legislatures acting within their respective fields. When a Legislature, for example, annuls a law declared by the Supreme Court, it performs a function which is assigned to it by the Constitution and does not encroach in any way upon Article 141 or any other provision of the Constitution. It is quite clear that, the Supreme Court does not make a law by delivering a judgment. It only by a process of judicial interpretation or determination, declares what the law is. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no merit in the above contention of Mr. Nanavati. In M. P. V. Sundararamier Co. V. State of Andhra Pradesh [1958]1SCR1422 , their Lordships of the Supreme Court observed as follows in connection with the validity of section 2, of the Sales Tax Laws Validation Act, 1956. . . . there is nothing express in Art. 286(2) imposing a restriction on the power of Parliament to enact a law with retrospective operation. The Sales Tax laws Validating Act cannot be held to be bad on the ground that it is retrospective in operation. An argument under this head similar to the one advanced by Mr. Nanavati was advanced before their Lordships of the Supreme Court in Mohammadbhai Khudabux Chhipa v. State of Gujarat AIR 1962 SC 1517 . Their Lordships rejected such an argument in the following words at page 1529:- We have not been able to understand this contention, for it is not disputed that the legislature has power to legislate retrospectively even with respect to taxation (see AIR 1956 SC 468) where Sales Tax Laws Validation Act, 1956, was held constitutionally valid. The Supreme Court had, in an earlier case reported in: [1962]2SCR659 , Mohammad Hussain Gulam v. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : He contends that, the authority to levy a tax at all material times that is at the date when the house tax was levied and before the commencement of the Validation Act, was supplied to the Municipality by section 73 of the Act. He contends that, therefore, in order that the Municipality may have authority of law to retain the collections illegally levied, or to recover the amount of a tax illegally imposed, it is not merely enough to pass a Validation Act. He contends that, in order to supply the necessary authority of law, it is further necessary for the State Legislature to amend S. 73 suitably so as to confer authority on the Municipality retrospectively to levy the tax. In other words, according to Mr. Nanavati it is not enough for the State Legislature to validate past rules, past imposition of a tax, past assessment or past collection. According to him, such past acts, being illegal in their inception, would continue to be so in spite of the Validation Act, unless section 37 and the other sections relating to assessment, collection, etc., are suitably amended, to confer retrospective authority on the Municipality in regard to all the aforesaid past processes. Confining our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case and the facts obtaining in Mohammadbhais' Case AIR 1962 SC 1517 decided by the Supreme Court. Four notifications, Nos. 306 to 309 XVI-58, dated 30th December 1958 issued under the Minimum Wages Act, were struck down as invalid and inoperative by the Madhya Pradesh High Court in Anand Transport Co. (Private) Ltd. V. State of Madhya Pradesh, MP No. 150 of 1959 (MP), Corporation of the City of Jabalpur v. State of M. P., MP No. 66 of 1959 (MP), and Narottamdas V.P.B. Gowarikar (1961)ILLJ442MP . They were so struck down because, the revised rates of minimum wages fixed under the Minimum Wages Act, 1948, were not in accordance with section 5(1)(b) of the Minimum Wages Act, 1948 inasmuch as they did not specify any date for the receipt of representations, and also on the ground that they gave retrospective operation to the rates of minimum wages though the Minimum Wages Act did not authorise the issue of a notification with retrospective effect. In Narottamdas' case (1961)ILLJ442MP , the notification was held to be invalid also on the additional ground that, the Advisory Board constituted by the Government was not validly constituted in conformity with the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to deal with the particular subject specified in Lists I, II and III of the Seventh Schedule of the Constitution (see United Provinces v. Atiqa Begum. Piare Dusadh v. Emperor; and Mst. Jadao v. Municipal Committee, Khandwa. The power of validation is included in the power of legislation. It follows from this principle that an invalid Act under an Act can be validated by subsequent legislation of the authority which enacted the Act in the exercise of its legislative powers conferred by the entries in the Lists. The fixation of minimum wages notified on 30th December 1958 being an Act of the Government under the principal Act, which is a Central Act, the invalidity in that fixation could be validated only by Parliament. Therefore, the ground on which the Madhya Pradesh High Court invalidated section 31A was not the ground that the principal Act, under which the executive or the legislative Act had been invalidly done, had not been amended, but it invalidated that Section on the ground that the Madhya Pradesh Legislature had no legislative authority to amend the Central Ac under which the original notifications had been issued. In our judgment the two problems are entirely diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elegate in the matter of taxation, but, in law. What actually happened was that a definite authority was given or conferred by a sovereign Legislature upon a subordinate authority was given or conferred by a sovereign Legislature upon a subordinate authority to legislate on the subject of taxation. In our judgment, there is some force in the argument of Mr. Nanavati, but, that is not sufficient to uphold his contention. In our judgment, even if the true legal position is that, the Legislature had conferred power on a local authority to levy a tax, thereby, the Provincial Legislature, and now the State Legislature, did not abrogate its power to tax the citizens in the same field. In our judgment, having regard to our Constitution, it cannot be denied that the State Legislature had the power to impose all or any of the taxes enumerated in section 73 of the Boroughs Act and has the power under section 99 of the Municipalities Act. The State Legislature had that power at all the relevant times, that is, the times in regard to which the invalid tax was intended to be validated. That being the legal position, in our judgment, without any further intervention from the local authority, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r are not saved for future. Now, Mr. Nanavati draws our attention to the face that the first, the second and the fifth part of section 3 do not deal with the validation of the tax rules at all. The non-obstante clause obviously does not deal with that topic. The second part does mention the rules, but they are refereed to only for the purpose of designating the tax or rate which is not to be deemed to have been invalidly assessed, imposed, collected or recovered. The fifth part obviously confers authority only of recollecting or recovering any tax or rate already assessed before the commencement, of the Validation Act. Mr. Nanavati's contention is that, these three parts are the most essential and important parts of the validating provision and, as none of them validates the tax rules, the intention of the Legislature must be taken to be not to validate the tax rules at all. In our judgment, it would be wrong to interpret the section in the above manner. In our judgment, all the five parts of the section are important But, if more emphasis is to be given to any one part than the other then, in our judgment, the learned Advocate General is right that it is the third part which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer Act. But, however, there is a saving clause enacted in sub-section (2) of section 279 of the Municipalities Act. The clause relevant for the present purposes is clause (vi), the relevant portion of which we have already reproduced in a previous part of this judgment. Mr. Nanavati's contention is that, this clause (vi) is not applicable to the facts of the present case. That clause (vi) in terms saves a tax and rules imposed and made and in force immediately before the commencement of the Municipalities Act. Consistent with his argument previously noted, Mr. Nanavati contends that, this clause can save only a valid tax and rules and not a tax or rules illegally imposed or made Mr. Nanavati is right in reading clause (vi) in the aforesaid manner. But, once we reach the conclusion, as we have done, that the tax rules are rendered valid by the Validation Act. Then, that argument must necessarily fail. But, Mr. Nanavati has another arrow to his bow. He contends that, the Municipalities Act defines earlier municipal law to mean the enactments mentioned in section 2, clause (7) of the Municipalities Act and that, that clause does not include the Validation Act. Mr. Nanavati' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the tax rules did not survive the validation Act. Mr. Nanavati's argument was that in any view of the matter, the impugned tax between 27th January 1964 and 31st of March 1964, would not be saved. This represents the seventh and a part of the eighth submissions of Mr. Nanavati Mr. Nanavati's argument is that, the Validation Act came into force on 26th of January 1964 and the Municipalities Act came into force on 1st of January 1965. He contends that, if the tax rules do not ensure for the future then, the Municipality will not have a right to levy the tax after 27h of January 1964 and therefore, the levy of the tax from 27th January 1964 upto 31st March 1964 will be invalid and that,, even if clause (vi) of sub-section (2) of section 279 is construed as saving an illegal tax and confers authority on the Municipality to recover such a tax, it will not save the tax for the period between 27th January 1964 to 31st of December 1964, the date previous to the date on which the Municipalities Act came into operation. In our judgment on the aforesaid basis, the seventh submission of Mr. Nanavati will deserve to be rejected in any case, although in that contingency, a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second petitioner is not in any way affected at all and he has no right to complain. They say that, the tax is imposed on petitioner and there is nothing in the rules or the relevant law which makes petitioner No. 2 of the second petition responsible for the payment of the bills issued against petitioner. They, therefore, contend that, if there is any one who can make a complaint in regard to the impugned bills, it is only petitioner. On that basis, respondents contend that, petitioner being a company is not a citizen for the purposes of Article 19 and that being so, petitioner has no fundamental right to hold any property and, therefore, even no the assumption that the tax is expropriatory, petitioner cannot make a grievance under Article 19 at all. In the second instance, respondents contend that, even if one proceeds on the assumption that petitioner has the aforesaid fundamental right and that the tax is exprorpriatiory in nature and, therefore, void on the date it was enacted, that will not make the Validation Act void which was passed during the pendency of emergency. Respondents' contention is that, it is the latter Act which imposes the liability on petitioner to pay t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner No. 2 of the Second petition is a shareholder of the company. In our opinion, it does not make any difference that, in addition, he is a Director of petitioner company too in our judgment, a Director cannot stand on a better footing in regard to enforcement of a fundamental right on behalf of a company than its shareholder or a body of shareholders. Under the circumstances, we have no doubt whatsoever that, none of two petitioners has established a right to challenge the impugned taxation on the ground that its or his fundamental right embodied Article 19 has been violated. Mr. Nanavati, however, relies upon the distinction which was made by this Court in regard to this matter in the case of Arvind Mills Ltd. V. State of Gujarat, reported in (1966) 7 Guj LR 156. In that case, it was held that, though a company has no fundamental right conferred by the Constitution on a citizen, a company can challenge a law as void if the law happens to violate the fundamental rights of the citizens. Mr. Nanavati, therefore, contends that, if the taxation in question violates the fundamental rights of citizens, then the law is void and as such can be challenged by petitioner on that groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny executive action, because, the Article also states in terms that, while a proclamation of emergency is in operation, nothing in Article 19 shall restrict the power if the State to take any executive action which the State would, but for the provisions contained in Part III, be competent to take. It is obvious that, after a tax is imposed, the executive must take some action to levy and collect there same. The authority to levy and collect is supplied in the present case by the Validation Act. Therefore, it is quite clear that, when the payment of the impugned tax was demanded from petitioner by the Municipality, it demanded the same under a law which had the protection of Article 358. Even though that executive action may be violative of Article 19., the action will be protected, because Article 358 protects the executive action may be violative of Article 19, the action will be protected, because Article 358 protects the executive action in the same manner as it protects the making of a law violative of Article 19. In addition to this, in our judgment, the learned Advocate General is also right in contending that, petitioner's contention that the impugned tax is, in fact, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. This is so in the case of residential or business localities. The contention of respondents is that in the case of industrial properties, the yield is even more. In the present case, the affidavits filed on behalf of respondents show that, according to them, the yield expected in Broach is ten per cent of the capital value of a property. If the latter is taken as the correct figure of the annual yield of a property if the latter is taken as the correct figure of the annual yield of a property in Broach, then, the percentage of tax levied on industrial properties cannot be more than about, thirty per cent. The learned Advocate General says that, this is the ordinary percentage of municipal tax in almost every city of Gujarat the municipality of which takes care to carry out properly the duties and care to carry out properly the duties and functions assigned to it under the municipal law. Moreover, there is considerable force in the argument of the learned Advocate General that, the mere fact that the incidence of the tax happens to be seventy-five per cent of the annual value of a property by itself alone should not be regarded as confiscatory. Therefore, having regard to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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